TaxTMI 
TaxTMI 
2018 (1) TMI 1436
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....in the business of developing land and plotting and constructing houses there upon. Return of income was filed on 31.10.2006 declaring income of Rs. 190250/-. Survey proceedings u/s 133A of the Act was conducted on 15.03.2007, Income surrendered during the course of survey was retracted on the next day pleading that the surrendered was made under coercive presser and deserves state of mind. Case selected for scrutiny. Notices u/s 143(2) and 142(1) issued. Detail filed by the assessee were examined. The Learned Assessing Officer( in short Ld. AO) completed the assessment after making addition of Rs. 1,06,49,250/- for suppression of sales and also addition of Rs. 28,66,250/- for unverified creditors. The appeal by the assessee before the Ld. CIT(A) brought part relief. Now both the assessee and Revenue are in appeal before the Tribunal. 3. First common issue relates to alleged unaccounted sales addition of Rs. 1,06,49,250/-. The Ld. AO made the impugned addition observing that the assessee has not shown actual sale consideration in its books and they were disclosed in the range of 25% to 46% of actual sales consideration. The statement recorded by the AO in the case of few parties....
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.... of applying the provision of section 145(3) by the Assessing Officer And estimating the income of the appellant by the Assessing Officer. It is observed that there are certain discrepancies in the accounts of the appellant and appellant has not recorded sale proceeds in entirety in its books of accounts which are evident from the statement of the creditors who had given advance against the purchase of plot in Madhuban Colony, Dewas. Shri Rajesh Agrawal who had been working with the appellant as property broker has also admitted that during the survey u/s 133A that registry was made on lesser amount than the actual price of the plot. On that account he had surrendered Rs. 5,00,000/- during the survey, although later on he has retracted from his statement and explained that the entries recorded in the diaries were only estimates. But, it does not change the facts of the case that appellant has not recorded sale proceeds entirely in its books of accounts . The AO has recorded the statements of some of the plot holders on test check basis and appellant could not rebut the finding of the AO recorded on the basis of the statement. Appellant has raised objection only, but could not furni....
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....e appellant after rejecting books of accounts by invoking provisions of section 145(3). It would be appropriate and meet the interest of justice if the sales is estimated at Rs. 1,00,00,000/- in place of 70,99,500/-. But the entire difference in the sale cannot be taken as income of the appellant and only net profit of the on the estimated sales can be taxed. 3.2.17 Hon'ble M.P. High Court in the case of CIT vs. BalchandAjit Kumar 135 Taxman 180 (M.P.). Hon'ble High Court has held that : " The total sales cannot be regarded as the profit of the assessee. The net profit rate has to be adopted and once a net profit rate is adopted, it cannot be said that there is a perversity of approach." 3.2.18 Further the net profit as shown by the appellant cannot be applied in its case because in the case of the appellant there are suppressed sales and appellant has not recorded the entire sales in its books of accounts. Hon'ble ITAT, Indore Bench, Indore in the case of M/s Shree Ram Tractors vs. ITO ward 1 (2), Ujjain reported in ITA No. 1102 to 1105/Ind/04 and ITA No. 63 to 66/Ind/05 dated 30.01.2006 has held that : " After considering the totali....
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.... material before us. We find that during the course of assessment proceedings, the assessee could not produce complete details of unsecured loan/creditors and advance received against plot booking to the satisfaction of Ld. AO. For this very reason, the Ld. AR calculated the amount of trade creditors and unexplained cash credit totaling to Rs. 1,35,15,500/- but made the impugned addition for unproved creditors at Rs. 28,66,250/- after giving benefit of deduction towards addition made for suppressed sales of Rs. 1,06,49,250/-. 10. We further find that the ld. CIT(A) deleted the impugned addition of Rs. 28,66,250/- observing as follows: "3.3.4 I have considered the finding of the AO and written submission of the appellant carefully. The AO has added Rs. 45,16,000/- of opening balances during the year under consideration. It is already decided by the CIT(A) in the case of the appellant for A.Y.2005-06 that addition in respect of earlier year advances was not justified in this year. It has to be taxed in the year when the appellant has received the advances. The AO can examine the genuineness of the transaction in the relevant year only. However, Assessing Officer is free t....
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....d anything on this issue and not given any justification for sustaining addition after considering the supporting documents furnished by the appellant. 3.3.6 The appellant has not taken unsecured loans, the advances received by it against plot booking is not in the nature of cash credit, therefore appellant is not required to prove the creditworthiness of the depositors who have given advance against the booking of the plot. The appellant has provided the addresses to the AO on the basis of the information provided by the prospective buyers, if they were not found on the given address or not responded in proper manner to the AO appellant could not be penalized for their action. It is held by the Hon'ble ITAT, Indore Bench, Indore in the case of the appellant for the A.Y. 2005-06 that: " it is not in dispute that the appellant was engaged in the business of developing and selling plots houses. The advances were received from the customers against the booking of plots/flats which were either paid in cash or by cheques. In some cases advance was received in installments. As per the terms of booking, the registry was to be got done only after receipt of entire amo....
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.... assessee's own case for A.Y. 2005-06, detailed finding of Ld. CIT(A) which goes uncontroverted by the Revenue as well as in the given facts and circumstances of the case and the documents placed before the lower authorities, find no reason to interfere in the finding of Ld. CIT(A), deleting the addition of Rs. 28,66,250/-. 12. As a result Revenue's ground No.2 for A.Y. 2006-07 is dismissed. Now we take cross appeal for A.Y. 2007-08 13. First common issue relates to addition of suppressed sales of Rs. 3,72,79,410/-. The Ld. CIT(A) estimated the sales at 2.5 crores and estimated net profit @ 8% thereby sustaining addition at Rs. 17,05,082/- and deleted the remaining addition of Rs. 3,55,74,328/-. We further find that very same issue came up before us during the adjudication of appeal for A.Y. 2007-08. As all the facts and circumstances remains the same which have not been disputed by both the parties, we are inclined to apply same view as taken while deciding the issue for A.Y. 2007-08 and confirm the view taken by Ld. CIT(A) sustaining addition of Rs. 17,05,082/- and deleting remaining addition of Rs. 3,55,74,328/-. As a result ground No.3 of Revenue's appeal and Grounds N....
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.... ITAT, Indore Bench, Indore in the case of the appellant for the A.Y. 2005-06 that: "it is not in dispute that the appellant was engaged in the business of developing and selling plots houses. The advances were received from the customers against the booking of plots/flats which were either paid in case or by cheques. In some cases advance was received in installments. As per the terms of booking, the registry was to be got done only after receipt of entire amount of sale consideration. Thus, the amount so received for booking the land/house was not strictly in the nature of case credit in so far as normally the assesses was not under obligation to return the and such booking payment/installment was got converted in to income in the year of receipt of entire amount of sale consideration of the respective plot/flats. The booking amount was, thus not purely in nature of cash credit for which the assesses was required to prove the creditworthiness of the persons, who booked the plot with him." The appellant has filed the copies of the sale deeds in respect of 17 cases in which amount involved at Rs. 28,05,100/-. I have verified respective registries placed on record and the ....
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....proceedings before first appellate authority and nor any substantial evidence has been placed before us. We, therefore, in the given facts and circumstances of the case, find no reason to interfere in the finding of Ld. CIT(A) confirming addition of Rs. 35,37,500/-. Thus, ground no.4 of the assessee's appeal is dismissed. 19. Apropos ground no.5 of assessee's appeal relating to addition u/s 68 of the Act at Rs. 3,30,000/-, we have heard rival contentions and perused the record placed before us. 20. We find that this addition related to 4 entries appearing in the name of Shri Ramesh Shinde, at Rs. 45,000/-, ShriDev Karan Yada, at Rs. 1,55,000/-, ShriLaxmi Narayan Chowkse, at Rs. 60,000/- and Shri Ashok Rao Thourat at Rs. 70,000/-. For all these four persons assessee miserably failed to provide any information sufficient to prove the genuineness and creditworthiness of the cash credit. The Ld. CIT(A) confirmed the addition of Rs. 3,30,000/- by observing as follows: "I have considered the fact carefully. The appellant has filed explanation in respect of each and every except 4 entries appearing in the names of Ramesh shinde (-Rs. 45,000/-), Devkaranyadav (-Rs. 60,000/-)....
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....count of difference in stamp valuation of the land purchased on 28.09.2006 and 09.10.2006 at Rs. 31,1000/- and Rs. 31,10,000/- from Mr. Amritpal Singh Khanuja. The market price of this land as per the stamp valuation authority was Rs. 42,69,500 & Rs. 42,44,000/- respectively. The difference of the market price and purchase cost of these two lands comes to Rs. 23,02,500/-. However, we do not find any basis in the finding of the Ld. AO applying provisions of section 50C of the Act, because provisions of section 50C of the Act applies on the seller of the property and not on the purchaser. The Ld. CIT(A) has rightly adopted this view holding that provisions of section 50C were not applicable on the assessee being the purchaser of the property and also during the survey proceedings no documentary evidence was found which may prove that the assessee has made payment over and above the registered valuation of the property. In lack of any incriminating material, no addition was called for by the AO as rightly held by I.T.A.T., Indore bench in the case of ACIT vs. Raj Homes P. ltd. Bhopal 9 ITJ 286 (2007) and further Hon'ble High Court of Delhi in the case of CIT vs. Dheengar Metal Wor....
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....llation charges being the extra amount paid together with the amount of advance observed that the assessee returned the amount of advance after a period of long time and paid extra amount to reduce the profitability and simultaneously increasing the cost of stock. He also observed that the modes operandi adopted by the assessee in A.Y. 2008-09 was not followed in the preceding A.Y. 2007-08. He also observed that there was a change in method of valuation thereby giving rise to applicability of section 145 of the Act. However, auditor did not report any deviation in method of valuation. In backdrop of these finding Ld. AO added the amount of Rs. 45,13,000/- to the income of assessee. When the issue came up before the Ld. CIT(A), it was revealed by him that actually total payment of advance was Rs. 50,08,000/- which already included extra amount paid of Rs. 10,37,000/-. The portions of advance amount repaid by the assessee is of Rs. 39,71,000/- and the Ld. CIT(A) deleted this addition of Rs. 39,71,000/-, in view of the fact that the Ld. AO could not bring anything material on record to prove that appellant has not made repayment to the customers. 29. Further from perusal of the rec....
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.... by the assessee thereby adding Rs. 10,86,557/- to the income of assessee, we have heard the rival contention and perused material on record before us. 32.We find that the Ld. AO invoked the provision of section 145(3) of the Act by observing that there is a change in the valuation of closing stock and accordingly estimated net profit @ of 8%. Ld. CIT(A) deleted this addition in lieu of his finding of confirming addition of Rs. 10,37,000/- sustained by way of disallowing the claim of cancellation charges. We also find that Ld. CIT(A) took the basis that the AO has not pointed out any defects in the books of account and did not compare the case of the appellant with the past history nor cited any comparable cases. 33. We, however, do not agree with the finding of Ld. CIT(A) because in the preceding years in A.Y. 2006-07 & 2007-08, we have confirmed the view of adopting net profit @ 8% being applied on the total/estimated sales. We, therefore, following the consistency as taken in the past as well as similarity of facts are of the view the Ld. AO has rightly applied net profit @ 8% on the total sale of the assessee and we therefore, brush aside the view taken by Ld. CIT(A) that....